Canada’s CPPIB Returns 2.3% in Q2 Fiscal 2020

The Canada Pension Plan Investment Board (CPPIB), Canada’s largest pension fund, reported that its investment portfolio returned 2.3% net of costs during the second quarter of fiscal 2020. That raised its total net asset value to C$409.5 billion ($307.4 billion) from C$400.6 billion at the end of the previous quarter.

“CPPIB continued to deliver steady returns this quarter,” Mark Machin, CEO of CPPIB said in a statement. “During this time, our teams continued to lay the groundwork for future value creation.”

The fund also reported 10-and five-year annualized net nominal returns of 10.2% and 10.3%, respectively.

The C$8.9 billion increase in assets during the quarter consisted of C$9.2 billion in net income after all CPPIB costs, minus C$300 million in net Canada Pension Plan (CPP) cash outflows. CPPIB said it typically receives more contributions than required to pay benefits during the first part of the calendar year. This is partially offset by benefit payments exceeding contributions in the final months of the year. On an annual basis, contributions continue to exceed outflows, said the fund.

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For the six-month fiscal year-to-date period ending Sept. 30, the fund increased C$17.5 billion, C$13.4 billion of which was net income after all CPPIB costs. There was also C$4.1 billion in net cash inflows. The portfolio returned 3.4% after all CPPIB costs during the six-month period.

The portfolio’s asset allocation as of the end of September was 31.9% in public equities (20.3% foreign, 9.6% emerging, 2.0% Canadian), 24.2% in private equities (20.8% foreign, 3.1% emerging, 0.3% Canadian), and 22.2% in government bonds. Real estate allocation was 11.6%, 10.3% in credit, 8.6% in infrastructure, 2.3% in energy and resources, and 1.3% in power and renewables. The fund counts external debt issuance, and cash and absolute return strategies as -8.3% and -4.1%, respectively, against its asset allocation.

During the quarter, the CPPIB released its 12th annual Report on Sustainable Investing, which details the fund’s activities identifying and addressing ESG factors.

“Embedding ESG factors more deeply into our investment process advances our investment objectives,” Machin said. “Addressing risks and opportunities resulting from climate change and promoting the effectiveness of boards of our portfolio companies, for example, help us improve investment returns over the long run.”

The fund also said the Office of the Chief Actuary of Canada reaffirmed that, as of Dec. 31, 2015, the base CPP remains sustainable at the current contribution rate of 9.9% throughout the forward-looking 75-year period. The projections are based on the assumption that over the 75 years the base CPP investments will earn a 3.9% average annual rate of return above the Canadian inflation, after all investment costs and operating expenses.

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Tags: Canada Pension Plan Investment Board, CPPIB, Mark Machin, Q2 returns

Allyson Tucker

The $139.6 billion Washington State Investment Board (WSIB) announced Thursday that Allyson Tucker, head of the board’s Risk Management and Asset Allocation team, has been named chief investment officer, effective Jan. 1. She replaces Gary Bruebaker, who is retiring after nearly 20 years with Washington and 42 years in the public investments industry. The WSIB oversees a $140 billion investment program serving state retirement plans and other public trust accounts in Washington state.

Bruebaker joined WSIB in 2001 after succeeding Christopher J. Ailman, current CIO of the California State Teachers’ Retirement System (CalSTRS). Prior to joining WSIB, Bruebaker served as a deputy state treasurer overseeing the Oregon Investment Council. He appeared on CIO’s July 2019 podcast shortly following his May 2019 retirement announcement.

Tucker joined the WSIB 10 years ago as an assistant senior investment officer focusing on public equity investments. “She is a longstanding member of WSIB’s Investment Team, and as such, she has been responsible for contributing to the due diligence review of virtually all approved private equity investments during recent years,” a spokesperson for the WSIB told CIO. “She also has had lead responsibility or co-lead on several of these investments.”

Tucker previously worked as an investment specialist at the investment management group servicing the Bill and Melinda Gates Foundation and the Gates family’s private wealth management office. Prior to this role, she served as a research analyst at Ragen MacKenzie, a full-service brokerage firm in the Pacific Northwest.

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“The responsibilities that come with public asset management are enormous and evolving,” Tucker said in a statement. “My first priorities will be to listen to my colleagues so that collectively we continue to uphold our promise to make every decision based on generating value for the WSIB’s beneficiaries.”

“The WSIB conducted nearly a year-long planning and search effort to prepare for Gary Bruebaker’s planned retirement,” the WSIB spokesperson said. “Recruiting firm Heidrick & Struggles was hired to help with the search. Dozens of candidates were researched; several (four to five) well-qualified and compelling finalists were interviewed in person.”

“We looked carefully at well-qualified and compelling people for this job, and I’m thrilled that Allyson emerged as our top choice amid a very competitive field,” Executive Director Theresa Whitmarsh said. “She has the vision, energy, experience, and intelligence to fill some big shoes being left by Gary Bruebaker, and we are doubly fortunate that she is a familiar and respected professional with our board members, staff, and industry peers.”

Tucker is a CFA and CAIA charter holder and earned a bachelor’s degree in business administration at the University of Washington. She serves on the board and investment committee for The Seattle Foundation as well as the board of Pacific Pension & Investment Institute.

WSIB returned 8.36% for its 12-month fiscal year ending June 30, beating its expected rate of return by 80 basis points. It has made blockbuster private markets commitments in 2019, committing $1.6 billion in February 2019, $2.1 billion in April 2019, and roughly $1 billion in September.

Tags: Allyson Tucker, chief investment officers, Gary Bruebaker, Washington, Washington State Investment Board